AM Best has withdrawn its credit ratings of The Hollard Insurance Company after the insurer requested to no longer participate in the interactive assessment process. 

In a final assessment, AM Best says Hollard is viewed as having strong financial flexibility, with a track record of shareholder support, including capital injections and hybrid debt issuances. 

It says Hollard has a moderate dependence on third-party reinsurance to support catastrophe and large loss exposure management, albeit reinsurance usage has been declining in recent years.  

The insurer’s operating performance is regarded as adequate, with an average return on equity ratio of 4.5% over the fiscal years from 2019 to 2023. 

“The company recorded limited underwriting profits over this period due to the adverse impact of several weather events, Covid-19 related provisions and elevated claims inflation.” 

AM Best expects Hollard’s underwriting profits to exhibit an upward trend over the medium term, primarily driven by a lower expense ratio as the insurer is in the process of implementing cost-saving initiatives and making significant investment in new systems and technology following its acquisition of Commonwealth Insurance in 2022. 

Hollard is one of the top 10 non-life insurers in Australia based on gross written premiums, with a “modest” market share of about 4% last year and its business profile is regarded as neutral. 

The company has recorded robust premium growth over the last 10 years, supported by a diversified network of distribution partners and affiliated underwriting agencies in Australia and New Zealand. 

But prospective premium growth is expected to be modest, given the company’s strategic focus on operational efficiency and technology development, AM Best said.